Tesla is taking it on the chin for trailing expectations and facing new investigations.
The shares fell 8.2 per cent Tuesday to the lowest in almost a year, while its non-convertible debt is at a new all-time low.
Tesla's stock and bonds fell as analysts cast doubt on the electric-car maker reaching its production targets for the all-important Model 3 sedan.
The U.S. National Transportation Safety Board also announced it's conducting its second investigation this year into a Tesla car crash.
Model 3 deliveries have fallen short of Chief Executive Officer Elon Musk's lofty goals since the company started building it in July.
Investors may be starting to lose patience at an inopportune time -- the NTSB is sending two investigators to examine issues raised by a fatal Tesla crash that occurred Friday in California. A deadly Uber Technologies Inc. accident that happened days earlier also is having ripple effects for the broader self-driving car industry, including Tesla supplier Nvidia.
"There's just so much bad news right now," John Thompson, the chief executive officer of Vilas Capital Management, which is shorting Tesla shares, said by phone.
"You've got the NTSB investigating a new crash, Nvidia suspending autonomous testing, and Tesla can't make the Model 3. When the stock goes lower like this, it gets harder to raise capital. It's going to be harder for them to raise money."
Moody's Investors Service downgraded Tesla's corporate family rating to B3, six levels into junk, and said its outlook on the company is negative. The company cited "the significant shortfall in the production rate of Tesla's Model 3" and liquidity pressures as two chief concerns.
"The negative outlook reflects the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity short-fall," the analysts wrote.
Tesla's unsecured bond dropped 3 cents to 89.5 cents on the dollar at 4:47 p.m. in New York after the downgrade was announced, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority.
Bloomberg's Model 3 tracker estimates the company may be making about 975 of the cars a week, well short of the target to build at a 2,500-unit rate by the end of this quarter.
An analyst at Citigroup wrote Tuesday that Tesla may be struggling to convert car shoppers into Model 3 buyers, while a Robert W. Baird & Co. said Monday the company might not achieve its weekly production goal by the end of March.
"This is the most negative I've seen sentiment in a while," Ben Kallo, the Baird analyst, said Tuesday. "It's really about the Model 3 production and ramp up, and the shorts are piling in. Everything else, including the Nvidia announcement--is just piling on."
Tesla is expected to report first-quarter production and deliveries next week.
The NTSB is investigating a crash involving a Tesla Model X that struck a highway barrier on Friday near Mountain View and caught fire. Freeway lanes closed for hours as firefighters tried to determine whether it was safe to move the vehicle and its damaged lithium-ion battery, according to the San Jose Mercury News.
NTSB will examine the post-collision fire and whether steps need to be taken to safely remove the vehicle from an accident scene, the agency said in a tweet Tuesday. It's unclear whether the Tesla's driver-assistance system Autopilot was engaged at the time of the crash.